2024 (8) TMI 406 - AT - Insolvency and Bankruptcy

NCLAT rejects insolvency appeal as claimed amount below Rs 1 crore threshold under Section 9 IBC

Khushbu Dye Chem Private Limited Versus Chemical Suppliers India Private Limited

NCLAT dismissed the appeal challenging rejection of insolvency application under Section 9 of IBC. The appellate tribunal upheld the adjudicating ... Maintainability of application - application is within the minimum default amount of Rs. 1,00,00,000/- as provided under Section 4 of the Code or not - pre-existing dispute with respect to the amount claimed to be due in the application or not in the instant case. Threshold amount - HELD THAT:- In this claim amount towards interest alone on loan was not termed as an operational debt. This may not fully support the case of the Respondent - reliance can be placed exclusively on SS Polymers Vs. Kanodia Technoplast Limited [2019 (11) TMI 1428 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] cross referenced in Steel India [2020 (8) TMI 578 - NATIONAL COMPANY LAW APPELLATE TRIBUNAL, NEW DELHI] on the issue of the interest to be charged in the invoice which was not signed by the Appellant. It was held to be a ‘unilateral document’ and such interest could not have been recovered. In the instant case also, the unilateral stipulation of interest by the Appellant without any agreement or understanding between the parties further weakens the Appellant's claim. Furthermore, according to Section 5(21) of the IBC, ‘operational debt’ is defined as “a claim for the provision of goods or services, including employment, or a debt for the repayment of dues arising under any law for the time being in force and payable to the Central Government, any State Government, or a local authority.” Section 5(8) of the Code defines ‘financial debt’ as “a debt along with interest, if any, which is disbursed against the consideration for the time value of money.” - the Appellant's inclusion of interest in the claimed amount is untenable as interest cannot be termed as operational debt under the Code. The present application is below the threshold limit of Rs.1,00,00,000/- and cannot agree with the claims of the Appellant in terms of the threshold amount and there are no infirmity in the findings of the Adjudicating Authority. Existence of any pre-existing disputes or not - HELD THAT:- Both the parties were having a dispute with respect to some cheques issued by the Respondent. Appellant had issued a legal notice dated 05.09.2022 for dishonouring of cheques. The Respondent claims that these cheques were issued in the year 2020 and they were stopped for payment as necessary payment was made through RTGS in the same year. The Respondent has claimed that the Appellant has fraudulently changed the dates of cheques and presented them in the bank for clearing but the Respondent immediately stopped the payment of the cheques and also filed a police complaint against Appellant for committing cheating and forgery. This is another dispute which has been going on between the parties. Without going into the details of the criminal case, apart from this material also there is sufficient other material on record that suggests there was a pre-existing dispute. It is well settled that if the Corporate Debtor raises a plausible contention about a pre-existing dispute, which is not just a moonshine or feeble legal argument, it would suffice for the Adjudicating Authority to reject the application filed under Section 9 of the Code, the Adjudicating Authority being precluded from determining as to whether the Corporate Debtor would be successful or not, with regard to the said dispute, at the time of decision making. It is evident that the Adjudicating Authority's Order dated 17th January 2024 is well-founded and does not warrant interference. The operational debt amount claimed by the Appellant is less than the threshold limit required under Section 4 of the Code, and there are pre-existing disputes between the parties. The present appeal is dismissed. Issues Involved:1. Whether the present application meets the minimum default amount of Rs. 1,00,00,000/- as provided under Section 4 of the Insolvency and Bankruptcy Code, 2016.2. Whether there is a pre-existing dispute with respect to the amount claimed to be due in the application.Detailed Analysis:Issue 1: Minimum Default Amount1. Facts and Contentions:- The Appellant supplied chemicals worth Rs. 1,82,54,891/- based on purchase orders and raised seven invoices with a payment term of 70 days.- The Respondent made partial payments amounting to Rs. 20,71,000/- and issued a debit note of Rs. 72,25,140/-.- The Appellant's claim includes an interest amount, which is not part of the operational debt under Section 5(21) of the Code.2. Judgment:- The Adjudicating Authority concluded that the operational debt amount, after considering the payments and debit note, is less than the threshold limit of Rs. 1,00,00,000/-.- The Tribunal upheld this conclusion, noting that the remaining amount of Rs. 89,58,751/- is indeed less than the threshold limit.- Interest cannot be included as part of the operational debt under Section 5(21) of the Code.Issue 2: Pre-existing Dispute1. Facts and Contentions:- The Respondent alleged adjustments based on a separate transaction involving the supply of 450 MT of IPA, of which only 143.850 MT was lifted and paid for.- The Respondent issued six cheques towards the claimed liability, which were dishonored with the remark 'payment stopped by drawer.'- The Respondent filed a police complaint alleging forgery, and the Appellant also filed a police complaint against the Respondent.2. Judgment:- The Tribunal noted that numerous communications and police complaints between the parties substantiate the presence of pre-existing disputes.- The Respondent's claims regarding separate transactions, dishonored cheques, and police complaints were well-documented and predate the demand notice.- The Tribunal referred to the Supreme Court's decision in Mobilox Innovation Pvt. Ltd. Vs. Kirusa Software Private Limited, emphasizing that if a plausible contention about a pre-existing dispute exists, the application under Section 9 of the Code must be rejected.Conclusion & Order:- The operational debt amount claimed by the Appellant is less than the threshold limit required under Section 4 of the Code.- There are pre-existing disputes between the parties.- The present appeal is dismissed, and the Order of the Adjudicating Authority dated 17th January 2024 in C.P. (IB)-892 (ND)/2022 is upheld.- The parties are directed to bear their own costs.